Skip to main content
Publish date:

Mercantile Bitten by Amaranth

The Baltimore bank loses money on the failed hedge fund.
Author:

Mercantile Bankshares

(MRBK) - Get Meridian Corporation Report

is the latest financial institution to fess up to taking a hit from the implosion last month at Amaranth.

The Baltimore-based bank, which is being acquired by

PNC Financial

(PNC) - Get PNC Financial Services Group, Inc. Report

, said it incurred a $1 million loss on its investment in the failed Connecticut hedge fund, which lost about $6 billion on a series of bad bets on natural gas prices.

Mercantile disclosed the Amaranth loss in its third-quarter earnings report. The loss on the Amaranth investment contributed to a $1.8 million year-over-year decline in revenue from the bank's hedge fund investments.

Overall, Mercantile said third-quarter profit just 1% to $71.6 million, or 57 cents a shares, up from $71 million, or 57 cents a share, a year ago. Analysts were looking for earnings of 60 cents a share.

Amaranth wasn't the only poor-performing investment for the bank in the quarter. Mercantile also said that revenue from its private equity investments declined by $3 million in the period.

The combined decline in revenue from the bank's investments in hedge funds and private equity deals resulted in a 7.3% drop in noninterest income to $4.7 million.

Mercantile isn't the only financial institution to get bitten by the events at Amaranth. Other banks and Wall Street firms that sank money into Amaranth include

TheStreet Recommends

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. (GS) Report

,

Morgan Stanley

(MS) - Get Morgan Stanley (MS) Report

,

Deutsche Bank

(DB) - Get Deutsche Bank AG Report

,

Credit Suisse

(CS) - Get Credit Suisse Group AG Sponsored ADR Report

and Man Group, the big hedge fund conglomerate.